The Indian rupee is predicted to weaken after a three-day winning streak as the US dollar index reaches a two-month high. Non-deliverable forwards indicate that the rupee will open at around 82.62-82.64 to the US dollar. The drop below 82.50 has dampened overall momentum, and given the strength of the dollar index, the rupee is expected to decline further. The decline in US equities, rising US Treasury yields, and positive US labour market data all contributed to the dollar index’s increase.
Investors are eagerly awaiting Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium, in which they hope to gain insights into potential interest rate hikes and Powell’s thoughts on the recent sell-off in US Treasuries. Powell’s speech will be closely scrutinized, with many expecting him to take a cautious approach to further tightening, waiting for confirmation from the data before committing to additional rate hikes. The outcome of Powell’s speech will likely impact the direction of the rupee.
Foreign investors have shown interest in Indian stocks and bonds, with net purchases of $108.7 million worth of shares and $8.8 million worth of bonds reported on August 23, according to NSDL data. These investments may also influence the performance of the rupee in the coming days.